BY SANDRA ROUSSEAU. Flight taxes, road pricing, and carbon pricing are often named as policy options to tackle climate change and urban air pollution. The concept of pricing undesirable effects is simple and sensible. If market prices reflect the economic damages from emissions, the market forces will work for our planet and help to protect it. Internalising external costs is a way to reflect the total impact of our actions. But how do we know what the correct price is? Ideally, such a price should reflect the social value of reducing emissions and incorporate the benefits of better air quality.
